Chrysler, America’s third largest car manufacturer, has filed for an initial
public offering as part of an elaborate game of chess between its chief
executive and its second largest stakeholder.

The company, which was one of a number of America’s car manufacturing giants to be rescued by Obama administraion in 2009, lodged its S-1 documents with the US Securities and Exchange Commission on Monday night.

It was a move that underscored Chrysler’s remarkable turnaround since it was bailed out by the US government. However, it is not one supported by the company’s chief executive, Sergio Marchionne.

Mr Marchionne would prefer to merge the reinvigorated Chrysler with Fiat, of which he is also chief executive. Fiat has had a sluggish few years by contrast, as crisis-hit Europeans cut back on spending on big ticket items, but Chrysler has made impressive gains, buoyed by the US recovery and the success of vehicle like its Jeep Grand Cherokee. Profits rose 16pc in the second quarter to $507m.

However, Mr Marchionne has effectively been backed into a corner by the United Auto Workers (UAW) healthcare trust, a fund set up to look after 115,000 retired auto workers and their families, which amassed a 41.5pc stake in Chrysler as part of the car manufacturer’s bailout deal.

The complicated rescue package also granted the UAW trust has the right to cash in a large proportion of its Chrysler stake at some point in the future – a right it is keen to excercise now that the car manufacturer is out of the red.

However, the two sides cannot agree on a fair valuation for the UAW’s stake.

In an ongoing court case about the isue, Fiat, which owns the remainder of Chrysler, claims the trust’s stake is worth around $3bn – a long way shy of UAW’s own estimates.

The UAW has responded by formally requesting that Chrysler, which is only behind behind General Motors and Ford in terms of size in the US, files for an IPO of 16pc of the company in order to help establish a price – similar to putting a house up for sale.

“It’s a very, very high stakes battle going on here,” Harley Shaiken, an industry professor at the University of California-Berkeley, told the New York Times.

“Both sides are being quite strategic… The union took a very high risk when it accepted shares in a bankrupt company four years ago to cover healthcare for retirees. Now they want to share in Chrysler’s success.”